Chapter 460: Conflict
Since the Age of Exploration, the prosperity of commerce has become closely tied to ports. A good port can promote economic development and attract population to coastal areas. The Industrial Revolution changed this dynamic with the rise of railways, significantly improving land transportation and allowing inland areas to develop. However, this development faces more constraints than maritime trade, as rail construction is restricted by numerous factors, leading to regional disputes. Areas connected by rail benefit from economic growth and may even see new cities emerge, while places bypassed by rail—even historic ones—can decline.
"In East Africa, many settlements came after the railways. Villages and towns formed along rail lines, and as long as railways remain viable, these places could continue to prosper." "Moreover, rail construction has tripled East Africa's transportation efficiency. Before, it took immense manpower and livestock to move goods to ports. Now, goods only need to reach the nearest railway station, and from there they're easily transported to the coast." "From the beginning, East Africa's railway projects were losing propositions, built with no expectation of return. But now, the return is clear: the inland is rapidly developing, and the east-west gap within the kingdom is shrinking—this is significant for national governance."
…
"Since 1875, we've noticed a sharp increase in hostility from the German government toward our enterprises, especially those branded with the Hechingen name. They've faced increased obstruction. Clearly, the German government now views us as a juicy target, and Bismarck's administration ignores our legitimate business concerns." "Bismarck represents the Junker elite. Our Hechingen Consortium's aggressive growth in Germany has clearly provoked the Junker landlords." "Just yesterday, someone in the German parliament proposed raising tariffs on agricultural products, especially targeting those from East Africa."
Constantino and Ernst listened silently. It was clear that the Germans were getting anxious.
Ernst said, "Father, see? I told you—our Hohenzollern name is no shield. When we chose to develop East Africa, we separated ourselves from our original group. Now, we're competitors." Ernst was referring to the Junker aristocracy. While their business models weren't identical to the Hechingen Consortium's, they overlapped enough to create conflict. The market is a zero-sum game—more market share for Hechingen means less for the Junkers.
Constantino replied, "I spoke with Wilhelm I by telegram earlier this year. He promised not to target the East African Kingdom."
Ernst responded, "We must distinguish between the Prussian royal family and its government—their interests don't always align. And the royal family ultimately serves the state; that's the foundation of their legitimacy."
"So what do we do now?" Constantino asked.
"There's no perfect solution. We'll begin pulling capital out of Germany and redirect it elsewhere," Ernst replied.
After all, the Hechingen Consortium wasn't East Africa itself. If it was under attack, East Africa could do little. Like Jewish capital, Hechingen capital had no homeland—if one place wasn't welcoming, it would simply move on.
"And where will you redirect the funds?" asked Constantino.
"To Austria-Hungary, the Far East, and Argentina," Ernst answered.
Though he didn't say it, East Africa was still Hechingen's biggest financial drain. Austria-Hungary was attractive due to its loose political control, giving capital more freedom—just as the Rothschilds thrived there. The Far East needed no explanation—huge market, deeply tied to East Africa. And after the naval visit, their tone had softened. Argentina had good prospects—at the very least, it could piggyback off Britain and the U.S.
"Sigh, so be it," Constantino said.
Following orders from the Hechingen Bank headquarters, capital began flowing out of Germany and into other countries. In retaliation for Germany's "butcher's tax," East Africa also planned to stop purchasing German steel once contracts expired, and shift procurement to Austria-Hungary.
This capital flight caused a brief panic in financial markets. But during a depression, panic spreads quickly—soon sparking a new round of crisis.
Just as the German government had started to recover, it felt renewed pressure. With capital fleeing the market, unemployment surged again.
Wilhelm I asked, "What's going on? I thought the economy had just started to improve?"
Bismarck, confident, replied, "Don't worry, Your Majesty. We're in the midst of a crisis. Some setbacks are normal. Everything is under control."
But in reality, the Hechingen Consortium had pulled out of Germany's agricultural investment sector. And coincidentally, as Hechingen left, someone else stepped in to fill the gap.
Yet those were not easy shoes to fill. Previously, Hechingen worked with the Junkers, giving them a share of international sales. Now, that support was gone. Hechingen's retail networks—especially supermarkets—could easily be supplied with East African goods instead.
Unless the Junkers had their own retail channels, they'd suffer real losses. Ernst wouldn't spare them anymore. Naturally, the Junkers were not a united front.
After falling out with the Prussian Junkers, Hechingen deepened ties with nobles in southern Germany—Baden, Württemberg, and Bavaria all benefited.
Germany was still a federation. Southern states had significant autonomy—especially economically. Ernst adopted a classic strategy: ally with one group, strike another, and divide his enemies.
Germany's main conflict with Hechingen was in agriculture. In other areas, competition was mild. The Junkers were a label for many different noble factions.
In industry, Hechingen had little overlap with them—focusing on light and emerging industries, while the industrial Junkers concentrated on heavy industry. The two paths diverged.
However, in agriculture, Hechingen's preference for East Africa inevitably clashed with the landowning Junkers. Despite previous concessions, Hechingen hadn't met their expectations.
Hechingen didn't fear the competition. Their main investments in Germany were distribution channels and food processing—not land. In modern terms, the Junkers were stuck at the bottom of the supply chain.
Still, food processing was part of manufacturing—making it vulnerable to control. Unlike finance, it lacked flexibility. So transferring these businesses to East Africa had become urgent.
East Africa already had a basic food-processing system, but mid- and high-end production was still in Germany and Austria. Now that things had soured in Germany, Ernst could begin shifting that industry home.
Thank you for the support, friends. If you want to read more chapters in advance, go to my Patreon.
Read 40 Chapters In Advance: patreon.com/Canserbero10